After a robust performance in the second half of last year, the Hedge Funds industry continued its strong run in the first half of this year as well. The industry gave an average return of 5.7% YTD (till June), after gaining almost 9% in 2020. In the last twelve months, the hedge funds have given a return of more than 18%, compared to more than 2.4% by bonds and over 38% by equities, as per the data by Aurum. Different hedge funds follow different strategies to earn a return for their investors, and as usual, some strategies performed better than others. Let’s take a look at the top performing hedge fund strategies in 2021 so far.
Q2 2021 hedge fund letters, conferences and more
Top Performing Hedge Fund Strategies In 2021
We have used the YTD return data (till June) from Aurum to rank the top performing hedge fund strategies in 2021. Following are the top performing hedge fund strategies in 2021:
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Macro (1.52%)
Macro strategy has earned a positive return in all the months (through June) this year, except in June. April was its best month where it gave a return of more than 0.8%, while in June, it generated a return of -0.92%. In the past twelve months, this strategy has returned over 10%, including more than 2.9% in November last year. Macro funds use fundamental and qualitative judgements to take positions in currencies, bonds, equities and commodities.
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Arbitrage (2.84%)
Arbitrage strategy has earned a positive return in all the months (through June) this year, except in March. February was its best month, where it gave a return of more than 2.2%, while in June, it generated a return of 0.27%. In the past twelve months, this strategy has returned over 12%, including more than 2.4% in December last year. Arbitrage funds look to benefit from the observable price differences in the same security or closely-related security.
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Quant (4.37%)
Quant strategy has earned a positive return in all the months (through June) this year, except in January and June. April was its best month, where it gave a return of more than 2.2%, while in June, it generated a return of -0.16%. In the past twelve months, this strategy has returned over 6.8%, including more than 2.7% in December last year. Quant strategies include the following sub-strategies: Statistical arbitrage, CTA, risk-premia, Quant macro/GAA (Global asset allocation), and Quantitative equity market neutral.
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Equity Long-Short (5.23%)
Equity Long-Short strategy has earned a positive return in three months and negative returns in three months (through June) this year. February was its best month, where it gave a return of more than 4%, while in June, it generated a return of 1.35%. In the past twelve months, this strategy has returned over 22%, including more than 5% in November last year. Of all the sub-strategies under Equity Long-Short, the sector-focused funds performed the best.
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Multi-Strategy (5.64%)
Multi-Strategy has earned a positive return in all the months (through June) this year, except in January. February was its best month, where it gave a return of more than 3.4%, while in June, it generated a return of 0.22%. In the past twelve months, this strategy has returned almost 17%, including more than 3% in December last year. Multi strategy hedge funds, as the name implies, use different strategies with an aim to offer smoother and more consistent returns.
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Credit (7.13%)
Credit strategy has earned a positive return in all the months (through June) this year. January was its best month, where it gave a return of more than 1.6%, while in June, it generated a return of 0.69%. In the past twelve months, this strategy has returned over 16%, including more than 3% in November last year. Credit hedge funds primarily invest in the debt instruments, or the instruments exhibiting "debt-like" characteristics.
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Event Driven (8.23%)
Event Driven strategy has earned a positive return in all the months (through June) this year. February was its best month, where it gave a return of more than 2.5%, while in June, it generated a return of 0.45%. In the past twelve months, this strategy has returned over 24%, including more than 5% in November last year. Event Driven funds normally invest in the companies that are facing announcements or anticipated corporate events, such as M&A, Spin-offs, and more.
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Long Biased (8.24%)
Long biased strategy has earned a positive return in all the months (through June) this year. April was its best month, where it gave a return of more than 3%, while in June, it generated a return of 0.75%. In the past twelve months, this strategy has returned over 26%, including more than 7% in November last year. All the sub-strategies under Long Biased generated a positive return except for Long Biased Commodities. The Long Biased Fixed Income was the best performing sub-strategy.
